8440 CONTINUES TO BE A HURDLE; TRUMP INAUGURATION IN FOCUS

8440 CONTINUES TO BE A HURDLE; TRUMP INAUGURATION IN FOCUS

WORLD MARKETS                             

US indices fell 0.3%-0.4% ahead of Donald Trump's inauguration. For the Dow, it was the fifth straight day of losses.

Weekly jobless claims dropped 15,000 to 234,000, around their lowest levels in 40 years. Housing starts spiked 11.3% in December, beating estimates. The Philadelphia Federal Reserve business conditions index rose to 23.6, above a consensus estimate of 15.8.

U.S. Treasury yields extended gains following the data releases, with the benchmark 10-year note yield at 2.487%, while the two-year note yield advanced to 1.238%. Dollar index, after toughing a high of 101.73, slipped to end at 101.17, the previous close being 101.29.

European market, except a 0.7% higher Italy, fell upto 0.5% with FTSE leading the losses. European Central Bank kept monetary policy unchanged. The euro briefly fell versus the dollar after ECB President Mario Draghi said in a news conference there is no sign of a convincing upward trend in underlying inflation.

AT HOME

After a flattish start, benchmark indices managed to add a fifth of a percent through the choppy trade. Sensex settled at 27309, up 51 points while Nifty added 18 points to finish at 8435. BSE mid-cap and small-cap indices rose 0.4% and 0.3% respectively. BSE Oil & Gas and Telecom indices climbed 2% and 1.4% respectively to become top gainers among the sectoral indices while Healthcare and Finance indices were the top losers, down 0.5% and 0.2% respectively.

FIIs net sold stocks and index futures worth Rs 132 cr and 210 cr respectively but net bought stock futures worth Rs 589 cr. DIIs were net buyers to the tune of Rs 380 cr.

Rupee depreciated 4 paise to end at 68.12/$.

Yes Bank's third quarter earnings beat expectations with profit rising 31% to Rs 883 cr. NII grew by 30% to Rs 1507 cr, with loan growth of 39%. Gross NPA ratio stood at 0.85%, up from 0.83% q-o-q while net NPA ratio was unchanged at 0.29%.

Axis Bank however disappointed as profit fell 73% to Rs 580 cr. NII grew 4.1% to Rs 4334 cr. Asset quality weakened with gross NPA ratio at 5.22% from 4.17% q-o-q and net NPA ratio at 2.18%, up from 2.02%. NIMs fell 21 bps to 3.43%. Watch list loans reduced to 2.8% of customer assets in December 2016, from 3.5% in September 2016 and 6.2% at the beginning of the current financial year. However non-watchlist slippages rose 33%. Gross slippages were down by 48% QoQ at Rs 4,560 crore, which were lower than estimates of Rs 4,500 crore.

OUTLOOK

Today morning, Shanghai is marginally higher, Nikkei is flat but Hang Seng is down half a percent. SGX Nifty is suggesting about 25 points lower start for our market.

At the risk of repeating, we have been mentioning that the 34-week moving average for Nifty is placed around 8440, a decisive crossover of which is required for a fresh upmove. For past five sessions, Nifty has been struggling to cross this level decisively.

Today being the weekly close, is would be interesting to see if the benchmark is able to cross this hurdle or moves further away from it. If 8440 is taken out decisively, 8560, the 61.8% retracement level of the 8970-7893 fall, would be the next target to eye.

8370 continues to be immediate support on the hourly chart below which 8300-8275 would be the next support area.